Business Commons^™

Dodd-Frank, Securitization, And The Subprime Mortgage Crisis, Stephen P. Hoffman

Stephen P. Hoffman

There are few things more constant in life than the rise and fall of financial markets. When markets crash, however, we are forced to restore them while learning from our mistakes. In the wake of the recent subprime mortgage crisis, Congress has drastically but deservedly overhauled the regulation of financial markets in order to not only prevent such disasters in the future, but to help restore financial stability more quickly if and when they do occur. In this Paper, I provide a background of the events leading up to the most devastating financial crisis since the Great Depression, focusing on …

A Dialogue On The Costs And Benefits Of Automatic Stays For Derivatives And Repurchase Agreements, Darrell Duffie, David A. Skeel Jr.

All Faculty Scholarship

For nearly two years, the two of us have had a running discussion of the costs and benefits of automatic stays in bankruptcy for qualified financial contracts (QFCs) such as derivatives and repurchase agreements, particularly those held by systemically important major dealer banks. Under current U.S. bankruptcy law, these contracts are exempted from the automatic stay. The advantages and disadvantages of this treatment have been a matter of significant debate for the past decade, particularly since the 2008 crisis.

After some background on AFCs and automatic stays, we provide our joint analysis of the costs and benefits of stays on …